He said Mr Shearer made a valid point that housing is a complex issue that cannot be solved overnight.

"The Labour Party has made a very useful and helpful contribution to the debate about housing affordability in Auckland and across the country.

"We need to explore all options and work with all sectors of the community to find solutions."

Mr Brown said Auckland Council would seriously consider the KiwiBuild affordable housing policy, launched at the Labour Party conference a week ago.

Prime Minister John Key said he thought Labour were in "fantasy land" over their proposed policy.

"You probably can build something for $300,000 but not at the level of expectation that those first-home buyers that will be hearing that policy think you can build."

He said the houses would be very small, and miles out of Auckland.

"The only place you can buy a section for about $50,000 is in places like Lumsden. I suspect if all the 100,00 homes were built there the price would go up.

"They are proposing 10,000 homes a year. I think there were 535 built by the top three residential building companies in Auckland [in a similar timeframe]."

Mr Key said the policy could cost more than $1.5 billion and would not meet the expectations of the first-home buyers.

"If Labour's track record is anything to go by - it will be a combination of both."

Labour's plan is to build 100,000 basic homes over 10 years - a scheme David Shearer said would create jobs as well as give first-home buyers in areas of high house prices, such as Auckland, a foot in the door.

Mr Shearer said it was the largest building programme in 50 years, and would create up to 2,000 apprenticeships.

The homes would cost $300,000 or less, according to Labour. Two-thirds of the homes built in the first five years would be in Auckland. Others would be in 'unaffordable' centres such as Christchurch, Tauranga, Nelson, Wellington and Queenstown.

Under the KiwiBuild policy there would be a one-off initial investment of $1.5 billion, to be recouped as homes are sold. Labour also proposed selling 'housing affordability bonds.'

The affordable housing scheme is intended to be self-sustaining within the first term, as the sale of one batch of houses would finance the development of the next.

"This represents a fraction of the $41 billion National has borrowed over four years and is substantially less than the $12 billion National has committed to Roads of National Significance. Because this is capital investment, it will not affect our path back to surplus," said Mr Shearer at the Labour Party conference.

The programme would be administered by Housing New Zealand but the construction would be completed by the private sector.

Mr Shearer said on TVNZ's Breakfast programme today (Mon) that Aucklanders would have to move away from the idea of a house on a quarter-acre section.

"It's going to have to be some terraced houses, some smaller sections - we're talking about affordable homes that people can get their first chance at owning," he said.

Mr Brown said the Productivity Commission's report suggesting releasing more land for housing was just part of the solution.

"Auckland Council does not agree that releasing more land is the 'silver bullet'. Regardless of land release, a large proportion of households will not be able to afford what the market can deliver. The issue is far more complex. Interventions across a wide spectrum will be required."

The Government have reinstated plans to allocate a percentage of houses at Hobsonville Point in Auckland as affordable homes priced under $485,000.

Up to 300 houses would now be sold for less than $400,000 and another 300 would be sold at prices between $400,000 and $485,000.

In 2009, 100 of the 3000 homes at the development were tagged as affordable under the Gateway scheme, giving lower-income first-home buyers a helping hand.